Informal Creditor Agreement
What
is it?
In cases where a company has a small number of creditors, and needs help clearing business debt and there is no immediate threat of potentially damaging legal action by a creditor.
Who is it for?
Businesses
who have a small number of creditors who are in need of a little time before
paying. This is on the basis of no immediate threat of legal action.
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The Process
Chamberlain & Co can provide guidance on negotiations to achieve an Informal Creditor Agreement for the staged repayment of debts. However, such informal arrangements, unless very specifically detailed and documented, are not usually legally binding in the same way as a company voluntary arrangement and may last well beyond the five years customarily used as the maximum term for a CVA.
Advantages
- Your relationship with the creditors is ongoing and you are not in the position where they are taking you to court
- A good option if you are suffering from a temporary financial difficulty such as an unforeseeable financial event
- Your credit rating isn't affected
- Professional fees may be minimised
Disadvantages
- Your temporary event may turn into something more serious and affect other creditors
- An Informal Creditor Agreement could change if a creditor decides to change their mind about the arrangement
- The interest on any debt continues to accrue with an Informal Creditor Agreement
Other Options available
Company Voluntary Arrangement (CVA ) , Administration , Creditors Voluntary Liquidation (CVL) , Members Voluntary Liquidation (MVL) , Compulsory Liquidation (CL)
Call us on 0800 195 4585 to see if we can be of any assistance regarding 'Informal creditor agreements'.
